6 Lending Banks Boost Economy With N1.3trn Credit In 2020

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Efforts to grow the nation’s economy has received a from the banking sector as six leading injected additional N1.337 trillion through loans and advances to their customers across all sectors of the economy between January and September 2020.

The loans were disbursed by Access Bank Plc, FBN Holdings Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc, Bank for Africa (UBA) Plc and Zenith Bank Plc for the nine months ended September 30, 2020.

Checks by Economic Confidential showed that the six credits to customers as of September 2020 stood at N13.958 trillion, by 10.59 per cent from December 2019, indicating that an additional N1.337 trillion was given out within the nine months period.

A breakdown of the loans showed that Zenith Bank Plc recorded the highest of N405 , increasing its loans and advances from N2.306 trillion to N2.711 trillion. It was followed by UBA N281 as the pan-African bank increased its loans from N2.169 trillion to N2.450 trillion while FBN Holdings Plc lent N262 to close the nine months N2.869 trillion from N2.607 trillion.

Access Bank Plc advanced N175 to its customers to increase its loans to N3.087 trillion as at September 2020, compared N2.912 trillion as at the end of 2019. Fidelity Bank Plc raised its loans by N146 billion to N1.272 trillion from N1.126 trillion, while GTBank Plc accounted for N68 billion, increasing its loans to N1.569 trillion, compared N1.501 trillion.

Analysts said apart from the determination of some to increase lending, the decision of the Central Bank of Nigeria (CBN) to increase ’ lending-to-deposit ratio (LDR) to 60 per cent and later to 65 per cent a deadline of December 2019 had contributed to the growth in loans and advances.

The LDR is part of customers’ deposits given out as loans by banks.

Some analysts had said the policy would lead to an uptrend in credit to the private sector.

For instance, analysts at Cowry Asset Management Limited said: “We feel that the sustained increase in credit to the private sector, which was induced by CBN’s policy of higher loan-to-deposit ratio, its increase from 60 per cent to 65 per cent took effect from January 1, 2020, stimulate real sector growth.

“In addition to the restriction on Open Market Operations (OMO) sales to deposits money banks (DMBs) and foreign portfolio investors (FPIs), we expect credit to the private sector to further rise with a resultant growth in production output.

“It is believed that the sustained credit to the economy coupled with other by the CBN would help the economy to recover quickly from the recession.”

Analysts at Greenwich Research also said to lift Nigeria out of recession and prevent a repeat of the post-2016 recession fragile growth hinge substantially on interventions focused on boosting the spending capacity of households.

“Already, the government has introduced measures including, but not limited to the N2.3 trillion stimulus programmes to reflate the economy and expansion of the register from 2.6 million to 3.6 million households, with direct cash transfers as part of plans to lessen the pandemic-induced hardships.

“Likewise, the disbursement of N3.5 trillion from the CBN’s interventions has been a for the overall economy. Importantly, investment in is critical to providing the much-needed growth impetus, even as intervention schemes are redesigned within frameworks that guarantee successful deployment,” they said.